Blue Cross takes doc groups' temp

Concerned that a portion of the state's 130 physician groups are financially ailing, the HMO unit run by Blue Cross and Blue Shield of Illinois is auditing those businesses with an eye toward shoring up their management and accounting methods.

Sources say HMO Illinois, the largest health maintenance organization in the state with 900,000 people enrolled, is looking to head off a problem with physician groups that are having difficulty paying their bills--a situation that, left unchecked, could result in the HMO increasing employer premiums to cover the unpaid expenses.

Depending on the results of the audits, the company may hire consultants to revamp the operations of troubled physician groups. At least 10 out of 130 of the state's independent practice associations (IPAs) are on HMO Illinois' watch list, according to sources. The insurer confirmed the audits but declined to confirm that number or disclose which IPAs are being examined.

"We are looking to help where we can," says Brad Buxton, Blue Cross' vice-president of health care management.

Still, industry experts say the list of endangered physician practice groups could grow, as already wobbly ones face the added challenges of a new Illinois claim-payment law, sweeping federal privacy regulations and the withdrawal of other insurers from the market.

"Everyone who manages these groups today is concerned about their long-term viability--whether they are going to have enough (members), whether they can meet regulators' demands and whether they can continue to provide reasonable compensation to their physicians," says Pam Waymack, managing director of Phoenix Services, a managed care consulting firm based in Evanston.

Complete coverage of this story appears in the June 11 issue of Crain's Chicago Business.